Toyota recently projected that it would surpass General Motors in 2007 as the world's top-selling automaker. GM lost $10.6 billion in 2005 -- about what Toyota earned in profits. Toyota's outstanding shares of stock are now valued at 10 times those of GM.
Toyota recently projected that it would surpass General Motors in 2007 as the world's top-selling automaker. GM lost $10.6 billion in 2005 -- about what Toyota earned in profits. Toyota's outstanding shares of stock are now valued at 10 times those of GM.
What's the matter with GM? Herewith, a first-hand testament.
On Christmas, my family needed to rent a car. Rentals were scarce, and the car turned out to be a Pontiac G6. With cars like this, it's a miracle that GM has hung in so long.
Thanks to slushy steering, the car meanders all over the road. By the time we reached my son's house, only 45 minutes from the rental agency, two passengers were carsick. This wandering might have been peculiar to the vehicle -- unbalanced tires or loose linkage -- or my driving. But as a veteran car renter, I'm all too familiar with GM's quirky steering.
Among several other design lapses: a clunky shift-lever whose settings are unlit in the dark, pull-up door locks located in hard-to-reach places, the absence of exterior key locks on doors other than the driver's. This last omission would be less annoying if the master lock on the driver's door unlocked the other doors (as it does on comparable imports). But GM does not include that feature.
So, picture me, parking in front of my son's house for Christmas dinner, trying to extricate my 93-year-old mother from the back seat. I gallantly go around to her side of the car to open the door, but it's locked. There is no outside door-lock to release it. I climb back into the driver's seat, and reach across my mother to the far rear of the back seat, to pull up the badly located lock. A truly intimate mother-son Christmas moment.
Who makes these bonehead design decisions? You might say I rented a cheap car, and I shouldn't expect fancy features. But the G6 is actually a mid-sized, mid-priced car, with a base price of $17,825, intended to compete with the Camry. Dream on.
Maybe it's unfair to blame a whole company for one crummy model. But the problems with Pontiac's G6 are emblematic. This was the car launched with a stunt hailed as one of the greatest product-placement coups ever. In September 2004, GM paid Oprah Winfrey an estimated $8 million to give all 276 souls in her studio audience a new G6. For several raving minutes, Oprah endorsed the product. You can imagine the high-fives among GM executives.
But the product had to deliver on the marketing, and the G6 didn't. How like GM.
GM has had three decades to respond to higher gas prices with fuel-efficient cars, and to meet the Japanese challenge with better products. Instead, GM keeps putting marketing and imagery over engineering.
GM skimps on the mass-market cars that once made it number one, and bets on high-profit items with limited markets, such as the Cadillac, Hummer, the Corvette -- a strategy guaranteed to turn GM from world's largest auto maker into a niche producer. Even after retiring the venerable Oldsmobile, GM has far too many nominally different brands that are clones of each other. The chief executive, Rick Wagoner, is a 28-year veteran of the same inbred GM culture that repeats the same mistakes.
GM is heavily dependent on captive customers through discounted sales to rental fleets -- 700,000 such sales in 2006. But far from introducing products to prospective individual buyers, lousy rental experiences like mine translate to lost individual sales.
You might blame GM's woes on poor American workmanship or the cost of American labor. But Japanese total labor costs are comparable, even with Detroit's higher health insurance costs. Increasingly, Japanese cars are being assembled in the United States, and the quality holds up just fine.
So what's wrong with GM? The cars. GM is famous for being run by bean counters and ad men. Toyota is run by engineers.
I take no joy in GM's fall or Toyota's rise. America, after all, is capable of engineering sublime consumer products such as the iPod and such complex manufacturing achievements as the Boeing 777. I was the satisfied owner of two Ford Tauruses, proof that American engineers and auto workers can make economic, high-quality cars.
I never subscribed to former GM president "Engine Charlie" Wilson's oft-misquoted assertion that what's good for the country is good for GM. But what's bad about GM is tragically bad for America, its workers, their communities, and for American leadership in manufacturing.
Robert Kuttner is co-editor of The American Prospect. This column originally appeared in The Boston Globe.
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